The catastrophe loss experience of the last two years is a wake-up call for the insurance industry, highlighting a trend of growing devastation wreaked by so-called “secondary” perils (independent small to mid-sized events, or secondary effects of a primary peril).

Insured losses from natural catastrophes in 2018 were USD 76 billion, the fourth highest one-year total, according to the latest sigma report from the Swiss Re Institute, and more than 60% of the losses resulted from secondary perils. The insured losses from natural catastrophes in 2017 and 2018 together were USD 219 billion, the highest ever for a two-year period. In 2017, when aggregate natural disaster insurance claims were the highest ever in a single year, more than half were due to secondary perils.

Losses from secondary perils are rising due to urbanisation, rising concentration of assets in areas exposed to extreme weather conditions, and climate change.

• Global insured losses from natural catastrophes in 2018 were USD 76 billion, the fourth highest on sigma records
• Over 60% of the losses resulted from so-called “secondary” perils, small-to-mid sized events or secondary effects of a primary peril
• Combined insured natural catastrophe losses for 2017-2018 were USD 219 billion, the highest ever over a two-year period
• Swiss Re Institute expects losses from secondary perils will rise due to growing assets in areas exposed to more extreme weather conditions
• Insurers need to focus more on primary and secondary perils to be able to underwrite catastrophe business sustainably and build global resilience